Will the Employee Free Choice Act (EFCA) drive up unemployment?Research sponsored by the “Alliance to Save Main Street Jobs” says YES – and that’s not all.

Members of the Alliance include the US Chamber of Commerce, the HR Policy Association, the Associated Builders and Contractors, the International Council of Shopping Centers, the Real Estate Roundtable, the Retail Industry Leaders Association, and the American Hotel and Lodging Association.

And they hired Dr. Anne Layne-Farrar, Director, LECG Consulting, to prove their point.

Ms. Layne-Farrar, the business group’s Paladin, testified before the Senate Health, Education, Labor, and Pensions Committee on March 10, 2009.Her testimony predicted not only higher unemployment, but also a lower employment rate, higher corporate costs, reduced R&D spending, a reduction in capital investment, a reduction in GDP, and other adverse effects if EFCA is enacted.

This research-for-hire is detailed in a report called, “An Empirical Assessment of the Employee Free Choice Act: The Economic Implications.”

These would be dire consequences if they were to come to pass.So it is useful to assess the credibility of the research that leads to these predictions.If they are credible, then we should reconsider enacting EFCA, especially in this economic climate.If not, then we should forge ahead to enact EFCA as soon as possible.

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Criticisms of EFCA

In her testimony and report, Ms. Layne-Farrar is highly critical of every provision of the Act, also known as H. R. 800.

For example, she disapproves of compulsory arbitration.This provision may tilt the bargaining table in favor of the union, in her view, because management will feel great pressure to accede to union demands – or else.

Of course, the union will feel the same pressure.Neither side wants to have an arbitrator impose a contract on the workers.The workers do not want that either.Good negotiators will not let that happen.

I have concerns about compulsory arbitration too, for a different reason: the arbitrated contract is not subject to ratification by the workers.If the union has not represented workers’ interests well or if negotiations result in stalemate, an arbitrated agreement could conceivably disadvantage the workers.In that case, the workers should have a chance to reject the contract entirely and the throw the union out.

Ms. Layne-Farrar disparages the penalties for unfair labor practices.She notes that without a lengthy campaign period leading up to a secret vote, there will be little time for employers to commit any unfair labor practices so the sanctions are inappropriate and unnecessary.Besides, she observes, unfair labor practices committed by either side in the past seem to be self-canceling and have had “little impact on reducing the likelihood of a union victory.”

True enough, there should be less time for employer shenanigans than there is now.However, that does not mean it will be impossible for motivated employers still to engage in all sorts of invidious deeds.Beyond that, if the business community truly believes that dirty tricks will be minimized and would have no impact anyway, they should have no objection to including sanctions in the final bill.They would run no risk of ever being sanctioned.

In fairness, I do think this section should be extended to include unfair practices by unions as well as by employers.

Predicted Effects of Card Check

Ms. Layne-Farrar’s sharpest criticism is reserved for the “card check” provision.This is a curious change in strategy: until now, business groups have argued that EFCA will take away the right to a secret ballot (which it does not do).Now, the line of attack is that a card-check approach will have adverse economic effects.Apparently, the right to a secret ballot was not so sacrosanct after all.